# Stableswap

Automated Market Making (AMM) is one of the main innovations in decentralized finance. First, Uniswap uses the constant product invariant (x·y = const) to create an asset pricing market, who does not make any assumptions about the pricing of assets and distributes liquidity uniformly over all prices.

This model, although very efficient for pricing most assets, it is not friendly to certain assets that are supposed to be stable - such as USD stablecoins or liquid staking tokens. The problem is that the slippage in asset prices can be large and requires liquidity providers to provide huge amounts of liquidity to keep prices stable. To solve this problem, we can achieve the need for a stable exchange by adding the constant sum invariant (x+y = const) to the constant product invariant and finding the middle-ground invariant between these two supply and demand curves.

Blue curve: constant sum (constant price), Red curve: constant product, Green curve: Stableswap

When you make a token swap on the Stableswap, you will pay a trading fee (depends on pools, usually is 0.02%) that much lower than the usual 0.3% on normal Araya AMM. The fee attribution is broken down as follows:

- 50% of trading fee goes to the LP as rewards
- 50% of trading fee goes to the Araya DAO treasury

When Stableswap launches, Araya will be rolling out StableSwap pairs gradually to test and improve the product further. The first batch of planned liquidity pool deployments will be notified in the future.

Last modified 3mo ago